Stock Market

• Interest

• The monetary charge for the privilege of borrowing money, typically expressed as an annual percentage rate 

• Can also be the cost you charge to lend money

Capital Gain

• The increase in the value of a capital asset when it is sold 

• Occurs when you sell an asset for more than what you originally paid for it (almost any type of asset you own is a capital asset)

Dividend

• Regular payments of profit made to investors who own a company’s stock (will be in the form of cash or stock reinvestment)

Commission

service charge assessed by a broker or investment advisor for providing investment advice or handling purchases and sales of securities for a client

Blue Chip stock

• solid company, a company that a lot of people want

• A company that typically has a large market cap, a sterling reputation, excellent financials, and many years of success in the business world, seeks to track the performance of financially stable, well-established companies that provide investors with consistent returns.

Cost basis

the original value or purchase price of an asset or investment for tax purposes. It is used to calculate capital gains or losses, which is the difference between the selling and purchase prices.

Portfolio

• an investors collection of stocks, funds, and other market-traded securities.

• often include some cash and bond investments. A diversified portfolio holds a range of different assets, varied in size, industry, and other factors.

P/E Ratio

• way to value a company by comparing the price of a stock to its earnings. 

• The P/E equals the price of a share of stock, divided by the company's earnings-per-share.

• 10-30 is a good ratio

• Many investors say buying shares in companies with a lower P/E ratio is better because you are paying less for every dollar of earnings

Stock split

increases the number of shares outstanding and lowers the individual value of each share.

Yield

• the earnings generated and realized on an investment over a particular period of time

  • It's expressed as a percentage based on the invested amount, current market value, or face value of the security.

Principle

The total amount borrowed from a lender or the initial amount invested 

Investment

an asset or item acquired to generate income or gain appreciation

Stock

a share in the ownership of a company, including a claim on the company’s earnings and assets 

Risk tolerance

the amount of loss an investor is prepared to handle while making an investment decision. Investors are usually classified into three main categories based on how much risk they can tolerate. They include aggressive, moderate, and conservative.

Mutual fund

• let you pool your money with other investors to "mutually" buy stocks, bonds, and other investments.

  • They're run by professional money managers who decide which securities to buy (stocks, bonds, or other securities) and when to sell them.

  • You get exposure to all the investments in the fund and any income they generate.

  • They offer a wide variety of investment strategies and styles.